Volcanic ash cloud economics: Europe's winners and losers

As Iceland's volcanic ash cloud hangs over Europe, stranding airline passengers for a fifth day, the train, bus, taxi, and ferry companies are doing a booming business. Would you pay $5,000 for a taxi ride from Norway to Britain?

By
Danna Harman, Correspondent /
April 19, 2010

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A volcanic ash cloud from the Eyjafjallajökull glacier volcano covered the farm of Pall Eggert Olafsson, in Thorvaldseyri, Iceland, Monday. The fine particles of ash have grounded flights across Europe, providing a windfall for train, bus, taxi, and ferry companies.

Brynjar Gauti/AP

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London

Getting stranded mid-journey because of volcanic ash is not cheap for many. But it is good business for some.

As hundreds of thousands of travelers across the globe spent a fifth day Monday in hotel rooms, buying food, making phone calls, booking alternative travel routes and wondering how and when they were going to get moving – many were also wondering how they were going to pay for it all.

And they were not the only ones. The situation has had a devastating financial effect on many – from the obvious, such as grounded airlines to the less obvious, such as schools that have to bring in substitute teachers and flower farmers in Kenya who can't get their produce to their main European market.

Stories of the ingenious ways stranded passengers were finding ways home all come with big dollar signs.

Ken and Mandy Caskie from Surrey, England, promised their son Max they would get him home from Madrid to take his A level exams (critical for getting into a university) this week, they told the Daily Mirror. And so they did, organizing taxis, trains and even, at the very end, a private boat to bring him across the channel to Dover. The price tag: 8,000 pounds. ($12,254).

Ian Harris, a dentist from Sheffield, England, says he spent 2,000 pounds ($3,063) to get his family home by rental car, train, and bus from their vacation in Rome.

British comedian John Cleese reportedly spent $5,000 on a mammoth overland taxi journey from Norway.

The biggest losers of course, were the airlines, which, according to the International Air Transport Association (IATA) were losing at least $200 million a day in revenue and are now demanding compensation from the European Union. "The estimate is conservative and does not include costs such as rerouting planes or caring for stranded passengers,” the IATA said in a statement.

It is being estimated that between disruptions to business, entertainment, and schools - the wider European economy was suffering additional losses of at least $150 million a day. Oil prices fell to around $81 a barrel in part because European flying restrictions have curbed jet fuel use.

Ferry traffic quadrupled

But, of course, not everyone was complaining. For some this was an opportunity – with those in the field of anything-but-airplanes transport doing particularly well.

The number of passengers using Brittany Ferries, P & O Ferries, and LD Ferries to get out of the United Kingdom surged in recent days. Brittany, the largest of the three companies, said 1,600 foot passengers had booked this weekend – more than four times the average.

Eurostar trains, in turn, were adding on as many trains as they could handle, and had served 50,000 more passengers than normal since the airline disruption began on Thursday, according to train officials.

Eurostar prices up

Lines at St. Pancras International station, where the Eurorail leaves London on its way to Brussels and Paris, were endless, as thousands waited in the hope of scoring a ticket – at 223 pounds ($341) one way – to Paris, a price that was prompting accusations of profiteering as a round-trip ticket can often be bought for as little as 69 pounds ($100).

“I don’t care how much it is at this point,” said Tim Burges, a Scot who has been on his way from Glasgow to the Maldives since Thursday for what he called his dream job as the first mate on a boat. He ended up taking a train to London on Saturday, and had been waiting to get a Eurorail ticket to Paris all weekend. On Sunday evening he found himself at the head of the line – but a line that had not moved an inch in three hours.

Once in Paris, if he could make it, explained Mr. Burges, he intended to (somehow) get to Madrid and from there (somehow) fly out. His plans, he admits, dejectedly, were murky.

“We have told people not to stand in that line, and repeated it in four languages...,” a train official said pointing to where Burges was standing, "because the ticket office is closed for the day. But people are standing there anyway, maybe because they think we will open again, or maybe to be in a better position for tomorrow? I don’t even know.”

Take the bus?

John Gilbert, managing director of Eurolines, the biggest bus company in Europe, which runs service to 500 destinations, stressed that his company was not raising prices, but did admit they were doing a brisk business, doubling the number of buses in operation.

On a regular day, Eurolines, based in London, runs 700 buses a day, said Mr. Gilbert, carrying about 3 million passengers yearly. On the most popular route, the 7-1/2 hour journey from London to Paris, there are typically 20 buses a day, with a return ticket costing about 50 pounds ($76).

This week there have been more than 40 buses a day on this route, with not an empty seat to sneakily rest your feet on. Even without charging more for the tickets this is a windfall, although Gilbert refuses to quote numbers.

“We have not increased prices into London, although some of our outbound members have put surcharges of about 10 percent because they had to contract more coaches,” he explains. “We are not focusing on the financial aspect at the moment … our main consideration is to help as many people as possible get from A to B.”

But, he admits, he thinks the company may well have picked up some converts to the bus system. “Typically people go with us because they are time rich and cash poor … but this week, people from all sorts of life are discovering we exist. No bad thing,” he says.